Retirement conjures certain mental images, but in reality, it is just a word, not an entitlement. Any one of us could retire at any time; that is, as long as we can afford to no longer receive a paycheck. The same situation exists even after you reach your 60s. You must have the financial resources to function without working if you want to retire, regardless of your age.
Once you digest the simple truth stated above, you have to anticipate the length of time that you are going to have to pay your way after you put your working years behind you. This involves estimating your life expectancy.
While nobody knows exactly when they will pass away, if you have no particular life threatening health concerns, you can find out the average estimated life expectancy for people of your age and gender. The Social Security Administration website has a life expectancy calculator.
If you think about it, living perhaps 10 years beyond what you anticipated could wreak havoc with your financial situation late in your life, so it is important to act conservatively and estimate upward.
Debt Reduction Can Be Key
When you are making preparations for the latter portion of your life, obtaining financial flexibility is critical. Planning to reduce your debt as you stay invested is an important can provide you with options.
Depending on how your health holds up and the other unknowns, you may face widely varying expenses. Being prepared to comfortably handle these eventualities is what long-term planning is all about.
Obviously, saving money for the future is a big part of any long-term plan for aging. But at the same time, reducing your expenses could have a significant impact. Since you must pay interest on your debts, eliminating them can provide a larger net gain than earning lesser interest on savings (depending on your circumstances).
Small steps taken consistently over a long period of time can make quite a difference. For example, by making additional mortgage payments above the required amount, you could pay off your loan well in advance — this is particularly attractive for many people who would otherwise leave the cash sitting in a checking account or low-interest CDs.
This could have a significant impact on your financial flexibility during your retirement years and the twilight years that will follow. In addition to managing debt, though, most people need to actively grow their money through prudent investment so they don’t lose money from inflation and taxes.
Intelligent long-term planning involves putting together a plan to save and stay invested for the future while reducing the burden of debt. The best way to create a framework that enables you to reach your goals is to devise a plan with the assistance of a licensed and experienced attorney.
Brace Yourself for Long-Term Care Expenses
The active retirement years are the first phase, but you should also be concerned about the twilight years that will inevitably follow. You may be unpleasantly surprised to hear that Medicare will not pay for a stay in a nursing home, and these facilities are extremely expensive.
Around 35% of people eventually need this form of care, and the average length of stay is one year. You are looking at over six figures a year, and once again, the one-year is an average. There are those that stay longer, and married couples have to prepare for two rounds of nursing home costs.
Medicaid does pay for long-term care, and this is a widely embraced solution that you can explore when you discuss your future with one of our elder law attorneys.
Schedule a Consultation Today!
Now is the time for action if you would like to speak with a professional about a plan for aging along with a well-constructed estate plan. You can send us a message to request a consultation appointment, and we can be reached by phone at 586-493-7661.